tv Power Lunch CNBC October 18, 2017 1:00pm-3:00pm EDT
this is a fabulous company and i own it and i am going to keep owning it. >> dow is up 143 points. 23,140 give a lot of thanks to that for ibm. better than expected earnings reports. the stock having their best day in eight offer nine years. "power lunch" will continue to follow the market story. they will do that right now. scott, thank you very much great to see the man from the far side over there, michael farr welcome. i'll tyler mathisen. this is power lunch. the record-breaking rally marches on the major averages new highs treasury secretary, steve manuchin will see a big drop if taxes don't go down. there is a much bigger crisis holding housing back right now it could drive prices higher this is one very happy boss.
our billion dollar buyer, tillman furtita, notching his first win as the owner of the rockets on opening night for the nba. he did it in thrilling style the former commissioner, david stern, will join us. the anthem protest team valuations and much more this slam-dunk addition of power lunch begins right now there is nothing wrong with the slam-dunk addition if i could do it, i would do it all the time i am brian sullivan. nobody is feeling blue about these markets. your money is now just 3.5% away from dow's 24,000. you can thank ibm, big blue adding about 80 points to the dow on one of its best days in decades. we will dig into ibms big quarter. the ipo of the day is a china-based micro lending
company. nothing micro about its gains. it is soaring in its debut allergan all on the move anthem rallied to help ensure creating a new pharmacy benefits unit michelle i'm michelle caruso-cabrera. here is what else is happening rising sea levels are threatening nearly $1 trill worth of u.s. homes, mostly moderately priced. an early reading on zillow, just over 80% have beaten the estimates. 10% have missed. nfl commissioner, roger goodell, set to hold a news conference any moment now we are going to monitor that and bring you the headlines as they cross. melissa? >> thanks, michelle. down 23,000. yesterday, the index now powering ahead to 24,000 what has to happen to get us there? bob pisani is at the new york stock exchange with some answers. hi, bob. >> melissa, here is an amazing stat the dow has moved 5,000 points in 18 months the dow is at average 1,000
points on average. every 3.6 months at this rate, we will hit dow 24,000 at the end of january and be celebrating 25,000 in the middle of may. sell in may and go away. you didn't hear it that doesn't work anymore. the market is worthrallying. everyone has come to believe that all the problems the market had have resolved themselves it is under this logic the marketables there is not going to be any real conflict with north korea, because everyone believes the chinese will work with us. the marketables tax cuts wibeli tax cuts will pass and that record earnings will continue because the global economy will keep expanding and tax cuts will add another 2%, 3%, 5% pick one the marketables the fed will not make any policy errors, because everyone believes the fed will remain just dovish not enough to rattle markets call it stoner logic dude, chill out.
it is all going to work out. maybe it will work out my bet is the biggest risk to the market is the last one much the fed will overshoot its target this great ocean of liquidity that the global central banks have provided. chinese micro lender qudia, they priced it at $24 it opened at $34.35 off of that. so far, these chinese ipos have been hot there are a couple more coming in the next couple of days back to you guys senate republicans from the finance committee meeting with president trump just moments ago. trump also speak in the past hour about tax reform, jobs and making america more competitive. eamon javers in d.c. with a full plate. >> reporter: we just some senate republicans come out and talk to reporters very briefly none of the democrats who were
here with them have appeared at the driveway camera position yet. we are going to wait to hear from them and see if we do have a breakthrough no news from that meeting. we did see the president speaking at the top of the meeting with republicans and democrats in the room alongside him. he talked about a lot of the highlights of his tam reform proposal including the one on business repatriation. here is what he said on that point. >> we will impose a one-time low tax on trillions of dollars of wealth parked overseas to encourage companies to bring back those profits and bring them back home and spend the money at home where it belongs the president also talked about health care reform yesterday, there was this bipartisan deal cut up on capitol hill to move forward on health care. the president initially seemed to embrace that in the rose garden in his remarks. later on in the day as we reported, the president backing away from that deal because it
would reimpose those csr payments to insurance companies that the president has called a political bailout. late in the afternoon yesterday, we got the indication that, no, in fact, the president did not support that bipartisan deal on health care that was moving up on capitol hill. today, he addressed that point and reiterated that he doesn't support the deal in its current form >> we'll see the bipartisan. we are going to see the bipartisan lamar alexander is working on it very hard from our side. if something can happen, that's fine i won't do anything to enrich the insurancecompanies right now, they are being inriched they have been enriched by obamacare like nothing anybody has ever seen. i am not going to do anything to enrich the insurance companies >> reporter: you remember the president last week cut off the payments to the insurance companies. based on his language, doesn't look like those payments are going to be restarted any time soon back over to you, tyler.
politico's ben white launching his new treasury bill. he says they must pass the tax bill or wall street will pay the price. >> there is no question that the rally in the stock market has based into it reasonably high expectations of us getting tax cuts and tax reforms done. it also has based into it op tic optimism on regulatory relief which they have gun to see and there are expectations to the extent we see the tax deal done, the stock market will go up higher there is no question if we don't get it done, you are going to see a reversal of a significant amount to these gains. >> here to take us inside, cnbc contributor, ben white congratulations on the podcast did he elaborate on how much the markets could pull back? this is an administration that sees the stock market as a report card on its progress
>> it certainly does you have president trump bragging about the stock market pretty much every day on twitter and elsewhere. i took it when he said a significant amount of these gains, that that was a reference to basically what the market has done since trump was elected in november we have seen significant gains, hitting record highs, piercing 23,000 on the dow. my assumption from his comments was, if we get to the end of this year, early next year and tax reform looks dead, there is no bipartisan agreement and republicans can't even agree on how to cut corporate rates and individual rates, you could see a big selloff in the markets that may not be wrong but a bit unusual for a treasury secretary of the united states to basically say you better do what we want you to do or your wall street rally is going to get it. >> they usually remain themselves from market commentary and say something very typical about the strength of the dollar.
did he give you any odds on the chances of whether or not it is going to pass? he tried to talk very positively about the possibilities. we have seen hedging from the part of the president and also from mcconnell >> we spoke on friday, a little bit before mcconnell and the president's walkbacks. he gave me a rock solid guarantee beyond trump's desk and signed at the end of the year since then, we have seen the omb director and the president an the majority leader begin to dial that back and suggest maybe it will be early next year it took reagan years to get his tax reform done in '86 i think that's realism there is not a lot of time left in this year we still need to pass a budget and a bill out of house ways and means. a number of significant policy disagreements need to be worked out. getting all that done by the end of the year to me seems impossible they are, i think, starting to set the table for expect this maybe first quarter, first half of next year at least mnuchin says absolutely
still this year. >> he knows it is a game of expectations, right? we know senator rand paul is not going to vote for budget as it stands right now, we don't know what is going to happen with senator cruz's vote the margin of error is getting smaller. the path to tax reform and meeting the end of the year deadline seems less and less likely steve manuchin of all people should know that do you get a sense of why he keeps boxing them into this very aggressive timeline? >> i think he himself kind of believes it and when he articulates the path forward in terms of getting that senate budget vote, my guess is they probably can get that passed and moving on to a bill out of ways an means where he disconnects from reality is what's going to happen when that bill is initially introduced it is going to get lobbied hard. there are going to be disagreements on getting rid of the state and local tax deduction and where individual rates should be and on the
corporate side exactly which deductions you get rid of to make it palatable on the debt and deficit. that's going to take a lot of time he is new to washington. he hasn't gone through this process a lot. he may be a bit surprised when he sees the sausage being made, how long it takes to get it cooked it will probably be into next year on the stock market gains, you made your point this is a global phenomenon this is liquidity all around the globe, markets all around the globe. the u.s. has some corporate tax reform based into it it is not just u.s >> how crucial is tax reform to keeping this record-breaking rally alive. let's bring in burns mckinney, portfolio with alians global good to have you here. burns, he said that if tax reform doesn't pass, the stock market will fall sharply do you believe that? >> i would argue that secretary
mnuchin is probably giving the current administration a bit too much credit for the recent stock market rally stocks have continued to churn upwards since the election but the market is not really pricing in a whole lot of success. if you look at portions of the market that are reliant upon tax cuts such as companies that could get fit from repatriation, small and mid-caps, cyclical stocks, they have given back a lot of those gains you look at the betting markets, for example, they really only price in about a 1 in 3 chance of success of the tax reform the up side to getting something pass is probably greater than the down side were it to fail. >> george, what do you think >> i don't know that that's exactly right. the reason is, if you have a republican president and a republican congress and you can't get tax cuts or tax reform passed, it really questions whether or not this government
can get anything done. i do think that's going to be a head wind. as we look at the expectations for companies and growth as a function of potential tax reform, we see that evenly priced in. >> where do you see that burns cited companies with the higher tax rates or more cash overseas companies that are more disproportionately affected by u.s. taxes relative to companies that are more internationally affected, they have 50% of that priced in. >> let's forget about taxes for one second and play demographics, it is a measure of
a lot of that. go deeper into your thesis >> you have household formation really starting to pick up a huge covert of the population is in this millennial group they have been living in parents' basements, renting. they haven't been buying homes like we have seen prior generations do now, you are seeing that happen. they are starting to form families at a greater pace than they have before they are starting to enter their early '30s and are getting married and having kids. they need more space and they need to own a home if you look over the past ten years, that generation has seen a housing market they haven't had a lot of faith in. you have ten years of history where they realize having equity in residential real estate is not a bad thing. it is a lot cheaper than rent frg rentin from an equivalent cash perspective. there is tremendous demand for housing moving forward the home builders haven't overbuilt supply like we have seen in the past the housing dynamic looks really
attractive going forward >> we have a segment coming up later in the show. we are talking about the big shortage of workers to get homes built. thanks so much for joining us. george maris and burns mckinney. a rough month of hurricanes and wildfires destroying thousands of homes in the race to rebuild, there is one hurdle larger than the rest, lack of builders let's talk more about what's being done about it coming up.
new housing data out the industry's biggest problem new homes are needed but finding workers to build them is tough diana olick has more di >> reporter: housing starts drop more than expected in september. while some of that can be attributed to hurricanes in the south, the real problem is an accuse labor shortage. that is only getting worse with the natural disaster a little perspective the number of houston homes destroyed by hurricane harvey surpassed the total number of single family building permits sfimt sfi estimated for the city just after the storm, the chairman of the national association of home builders explored the trump administration to ease up on immigration saying a successful guest worker program will help alleviate the current labor shortage in the residential construction sector, quicken the rebuilding efforts in texas and support the overall economic growth of this nation. the fires in northern california
have already destroyed far more homes than that. that will have massive repercussions for the housing market in california and beyond. >> all the resources are being drained to the rebuilding effort that's going to increase the cost of housing and renovation across the nation. the housing market can't take the shock of a natural event it can't take any shock. we are so tightly wound with inventory. >> reporter: curiously, home builders sentiment jumped despite drops in new home starts and sales. even the nhsb chairman warned his own constituency there would be difficulties ahead. back to you guys thank you very much. in the world of home construction, we often focus on the buildings. there are many types of companies involved beacon roofing makes, you guessed it, roofing. masonite makes doors it is not just homes themselves. roads and other infrastructure need help as well. those stocks have done pretty
well too you look at some materials, up 10%. let's stdiscuss it withstandly elliot thank you very much for rejoining us in the race to rebuild, you have the homes and the roads, rocks, aggregates as they are known in the industry based on price targets and current prices, martin marietta is your favorite stock right now with 30% up side seen. how come >> thank you very much for having us. we really like the whole group, martin, vulcan and summit. when you look at the demographic drivers for their business, about 20% come from the residential market we think it will continue to be a driver for these guys. look at population growth. aggregates are driven by a per capita of aggregates >> literally, i hate to call them that but the rock companies
literally make rocks we see their fortunes rise and kind of fall with the reduced expectation of an infrastructure bill or package, stanley do you think congress will get something done with infrastructure i know there are a lot of state projects >> certainly, the state projects are something that's been the most positive in what has been a fairly disappointing year. this would provide a stop gap measure for the highway fund >> why do i want to be in these stocks these stocks have been underperformers this year. if i want to play in the housing market, what the markets have told me is just invest in the home builders. i understand you don't cover them if you want to invest in u.s. residential or residential home building or the housing market, these don't look like the stocks to own >> i think that's fair
i mentioned 20%. you look at the second quarter, a lot of rain through the southeastern part of the u.s we have had the hurricanes these are great businesses you can count on generally speaking pricing every single year they are high fixed costs businesses once you have the volumes come through coupled with the pricing, the middles will be 60% plus and very strong earnings growth >> a couple of your picks are big guys, vulcan and martin mariota. do you expect these companies will snap up some of the smaller players? if so, who might be the prey here >> that's been an on going trend for quite some time. we have really seen it accelerate here within the past year not only have vulcan and u.s. concrete and summit announced fairly sizeable deals. we have seen some of the european cement players come
into the marketplace with consolidation in this business, it is all about logistics, about being able to deliver from point "a" to point bfrnl "b" at the lowest cost this is a trend we will continue to see >> thanks very much, stanley nfl commissioner, roger goodell, addressing the media shortly at the league meeting. the nfl dealing with a major controversy surrounding the national anthem. the nba had a similar issue 20 years ago. we are going to talk with the commissioner in charge back then david stern is going to join us next on power lunch.
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welcome back rick santelli live watching that two-year note yield as it continues to power higher 156. we will call them nine-year highs. look at the two-day of ten-year note yield they are not comping back nine years. maybe it is because the boon firmed up. this chart starts on september 1st. we have gone on 22 basis points hovering at 193 to 194 that's something to pay attention to the dollar is responding on the one-week chart if you really want to get to the center of it, think october 26th ecb meeting. look at this july 1st chart of the year versus the dollar this is a formation that looks
like the euro wants to go lower. what mario draghi says will have huge ramifications they have gotten so quiet lately tyler, back to you if you ask any nba fan who is going to win the title, they are likely to say like last year, the golden state warriors. las vegas this is the warriors are more likely to win than all the other teams combined are super teams like the warriors and cavs good for the league or do they take away some of the drama former commission teer, david stern, joins us next we will ask him about that, the anthem controversy, franchise values and much more david stern coming right up. energy is changing fast and we're changing with it. building a smarter grid, investing in new technologies, that's aep's road to the future. and the international brotherhood
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a bipartisan deal to stabilize health premiums. he says he does not see anything that changes his view that the senate should keep its focus on repeal and replace of obamacare. the manhunt continuing for a suspect in a maryland office shooting that left three people dead and two wounded the suspect is considered armed and dangerous. attorney general jeff sessions telling the senate judiciary committee he has not been interviewed by special counsel, robert mueller, as part of the russia probe. until the president waves any claims of executive privilege, he die kleins to answer questions about the private conversations. greg pence, one of vice-president mike pence's older brothers has filed documents indicating a run for congress in indiana. that's the news update this hour ty, back over to you it was ago any and ecstasy on the first nice of the new nba
season ago any for gordon hayward who broke his ankle in his first game as a boston celtics a different agoful angony for te golden state warriors, just after the buzzer tillman fratia ran on the court to celebrate with his players. friday, we will be with tilman fertitta, against mark cuban's mavs dueling tv stars, dueling texas teams. with us is former nba commissioner, david stern, now the league's commissioner emeritus i can't remember an nba season where there has been so much anticipation going into it partly because of all the player movement in the off-season i must begin with the controversy that has swirled
around the national football league about the players ha have taken a knee during a national anthem i wonder what your perspective is on it is. you and your league have a rule that requires the players to stand and you actually had to take action once against a player years ago who violated that rule. your perspective >> why must you begin with this? >> because mr. goodell is going to talk about this very topic in a few minutes. i can't think of a better guy to comment. >> i am going to answer after i say one thing. this whole thing is a distraction. it really is what it is distracting from is the fact that puerto rico is ravaged. we have a horrible situation with fire and flood and we have a national parks that are being opened up to drilling and to mining and commercial exploitation and the head of the epa thinks that we should all
breath dirty air and drink bad water. the country and particularly, the news outlets are consumed by this subject the answer is, we had a rule someone didn't follow it i asked them to not come out on the court without being prepared to stand he said, no. under the rules, he was suspended for a day for a game then, the next game, he came out and stood. that's the whole story it would have been great if someone had had a similar rule in the nfl and suspended them. it would have been better for mr. kaepernick than the current situation. everyone takes the bait of the president throwing this junk out to distract them from what's really happening in this country. >> i take your point on that there are obviously much bigger issues that the country has to deal with. at the same time, this is something that has really touched a nerve in a lot of americans who see these demonstrations as disrespectful.
that, in itself, is important. let me go to the nub of the question you think the nfl probably would be better off if they had had or if they do promulgate some sort of rule like the nba has >> it would be better off if they had had a rule. they might have. it would have been better off for mr. kaepernick because of the insatiable appetite of the news outlet's, every time the president tweets something about the nfl, you are going to ask me or someone else is going to ask me questions like this. the nba had it covered we were authorized under our collective bargaining agreement to have rules. we put the rules in place and then we enforced the rules it is not a question of freedom of expression or first amendment. it is just a question of collective bargaining and the enforcement of rules under the
agreement. it is a nonissue except for the president's tweets >> i hear your points as well. one of the reasons we will be in houston on friday is to go visit houston post harvey recovery we are there with tilman but we are going to focus on harvey recovery >> no, you are not we are going to houston to watch the game >> the game is on saturday i will not be there for the game >> no one is talking about the tragedy occurring in houston >> we were there i was there. >> as an economic matter, you are busy showing that the housing market is going to be a disaster because of the fire, because of puerto rico, because of everything. the current tri ountry is in di. we are talking about a football player who took a knee >> this is cnbc and the nfl, whether you like it or not, is a multi-billion dollar business at the heart of it. the point is, we were in houston. we are going back. i will not be there for the basketball game.
i'm going to come back home. >> the business of sports flows from the game, which you opened with and which was the pretense for getting me here. why don't i talk about the season i am happy to do that. >> let's say that i am local news anchor in milwaukee, mr. stern and i am a bucks fan does my team have a chance michael jordan, in an irnterview a couple of days ago, all these players calling each other and creating these one or two or three super teams means the other 20 some teams will be garbage. if i'm a milwaukee bucks fan, that doesn't make me happy >> i don't know what was in the cigar that michael wassmoking. all i can tell you is that milwaukee has a great up and coming star. they have had a good draft the fans in milwaukee are fwl flocking to buy or should be flocking to buy season tickets going into a brand new building. the fact of the matter is, when
i started as commissioner, there were two super teams, the boston celtics and the l.a. lakers. they haven't done too bad since then this is just another made-up issue, not as bad as the president's tweets and a good subject of conversation. see me in five years i'll let you know. so far, only three teams have been in the finals four years in a row. golden state is not one of them. >> is that good? >> i don't know. >> would cleveland/golden state be good for basketball again >> was boston and l.a. bad for basketball >> no, no. >> we'll see what happens. >> there was about 18 teams then also >> therefore -- i don't understand the connection. the reality is that the warriors have put together a great team they are very exciting to watch.
that's what can happen so many things can happen in this sport you should not mail the trophy to golden state yet. they are going to have to earn it >> there will be an on going narrative all year, certainly as to who will come out of the western division and who will come out of the eastern division that in turn has fueled a great growth in the valuations of the franchises from 20 million was what the cavaliers sold for during your tenure now, they are probably worth upwards of $2 billion. the knicks, a losing team, worth $3.3 billion
are we getting anywhere close, mr. stern, to where these teams in stock market terms are approaching fully or overvalued in your view >> no, because there are two developments that auger quite well for the future. the first is globalization the nba just came back from china where they played two games, one in shenzhen, one in shanghai there are opening season games -- not opening season. regular season games scheduled for mexico a regular season game will be in london no the nba is really going to be a global phenomenon and continue to be. it is already. two, digital the way that games can be seen, the way information can be spread the fact of the matter is that lebron james has twice as many social media followers as the president, which is really the way it should be >> if you are still the commissioner, sir, and netflix or amazon or facebook came to you and said we want exclusive
rights, exclusive rights, not as a subsidiary like twitter and amazon and the nfl to air live basketball and we are going to pay you billions more than your current contract, would you do that >> how many billions more? >> $1 billion, $2 billion? >> no, not enough. >> what's wrong with that? >> there is nothing wrong with it people forget that we used to be on pbs ted turner came into me and said, if we get 30 million subscribers on tnt, will you sifr suffer a reduction in viewership to help us grow. he used that to grow tnt to where we moved over from tbs to tnt. at some point, the distribution of content and games is going to have so many outlets available there will be such a bidding war, as you mentioned. it won't be from netflix but it will likely be from someone else >> all right, mr. stern, thank you very much.
we appreciate your time as always >> pleasure to be here >> i wonder about the exclusion there. shares of amazon up 34% to more than $1,000 a share. as the company pursues the next big thing, it pushes the stock even higher. is it spreading itself too thin. speaking of which, we are live in seattle with a look at how amazon is trying to improve alexa. hey, deirdre >> reporter: it may look like we are just hanging out in my apartment today. we are on the 30th floor of amazon's corporate headquarters. after the break, we are going to tell you why this is nothing like your apartment. >> alexa, go to break. at baird, we approach your wealth management strategy the same way to create a financial plan built to last from generation to generation. we'll listen. we'll talk. we'll plan. baird. sometimes they just drop in. always obvious.
so what else is new? humm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird. you know alexa's voice recognition is good but not perfect. amazon is investing in several start-ups working on better technology deirdre bowes is live with a
look at their lab. >> reporter: in alexa lab is where amazon tests new devices and alexa functions and they envision the future of the voice-powered smart home you can ask alexa to show you your shopping list or when this is all set up, simply say, alexa, good morning. it will terp urn up the lights the blinds and boil your water while reading you the news last night, we got it see the future of what alexa may be able to do with this accelerator. it is working with start-ups on the next features from voice-powered books to games to office technology. this was part of the first accelerator backed by a $100 million alexa fund we got it try out some other stuff like this game ball. this is how it works it is meant to get kids off the couch. you simply toss it like this it will choose the game you want
and i can throw it to another player off screen and it will record velocity, height, distance, all these kind of metrics. ultimately, guys, this and all the functions we saw last night and all the functions that are under development are ultimately to make alexa smarter and to keep amazon ahead in the a.i. race that its rivals are pouring money and resources in back over to you >> deirdre bose, thank you very much amazon hoping to build on the success of alexa by continuing to challenge apple in the tablet market. it's new ten-inch fire tablet is getting some pretty good reviews considering it costs $150. that is less than half the cost of the lowest price with 22 gigs of memory. joining us with the technology products editor. $149 for this. $329 for the equivalent. this is half the price
it may not be as good. is it a noble competitor could this challenge apple >> i was thinking about that i lot. i think it is a noble competitor for your kids at home. you have a couple of kids. i don't have kids. maybe you don't have an ipad and you don't want to spend $329 to get two for both kids. it is a great access point it is of music, books and they can get all of that. they don't necessarily need an ipad to do that. >> if you have kids, you hand them a $450 ipad they drop it the screen shatters. $149 seems more palatable. what would come out of that horse. what's amazon's ultimate goal? >> selling you anything. you get access to those movies for free or tv shows and original content is becoming huge for amazon. i want to call back, bezos said
they sell kindles for no profits but suddenly make money when they sell books to the users i think that's what's going on here why do you have to use the silk browser. amazon's browser can they use chrome or something else >> amazon doesn't license google play services. it is good at the price. maybe it will help is there market share moving forward. it is not going to go into schools and things like that this is purely a delivery machine. todd hazelton, $149. is the company at risk of spreading itself too thin and following the path of another big tech company like ibm, for instance just yesterday, they reported a decline in revenue for the 22nd
straight quarter stock is much higher what does amazon's management need to do to avoid making the same mistakes. joining us now is patrick moorehead, president and principle analyst. good to have you here. >> thanks for having me on >> i am old enough to remember when amazon decided they were going to sell more than books and then they went to cds and they said, that's okay they are the same size and really shippable everybody said they were going to fail. now, years have gone by and everybody seems to believe they can do everything. anything they step into they are going to be successful at, whether it is groceries or content creation is it worthy to ask right now? can and are they spreading themselves too thin? >> i think that's a great question to ask. i do think amazon is getting into the danger zone history is littered with companies who used to be at the top of the nasdaq who got into
areas that really weren't part of their core business you remember sisco was in consumer electronics for a while. dell started making tvs. intel was making microscopes so i really think that amazon is at that point like these other companies were thinking they could do no wrong. so they're extending themselves into self-driving cars trying to cut ups out of the last mile into groceries, into consumer electronics themselves so they really need to watch themselves. >> ultimately, though, when you look at what they are, are they a tech company are they a retailer? they specialize, though, really in distribution, right that is what they're really, really good at and once they can command it, hence why they think about pbms and pharmacy benefit managers because theying you ared out that chain. when you think of it that way is
that a more cohesive way and does it make more sense when you think of all of the areas they can get into >> well, i think i can talk myself into the distribution play and it reminds me of what dell was saying 15 years ago that their supply chain was so good they could sell groceries through it, and make money i just think it's a little bit a step too far when you get into drones and self-driving cars, and i do see how that gets linked into distribution of their products or other people's, but amazon's even talking about an ad network, and the reason that amazon is putting cameras on devices that are in your bathroom and your bedroom is because ultimately they want to compete with google for an ad network, and i just think that's a bridge too far. >> so -- so if you had to pin point the -- the amazon equivalent of intel going in to making microsofts for kid, what would it be right now? is it -- is it that? is it -- is it trying to start
an ad business is it drones is it self-driving vehicles? i mean, a lot of companies try lots of different things and they have venture capital arms that -- that do see investments of this sort >> yeah, i think right now it's -- it's the ad network, and amazon wants to tap into all of the money that facebook and google are making from advertising, and because amazon had failed in search and failed in phones, they didn't have a very good vehicle to collect customer profiles, and now what they've done is they've gone over the top by putting cameras on devices you never would have thought of so say you're sitting in the living room drinking a beer and the camera sees the brand of the beer you're drinking it would be smart enough to know you're serving up an ad that has a cpm or a click-through rate five to ten times that of a normal ad, and i think that's a step too far, and it could backfire because amazon is one of the most trusted
consumer brands out there, and i don't know what consumers are going to think of them mining their data in such an overthe top way. >> that's creepy. >> and i'm not -- i'm not afraid of alexa >> melissa and i -- >> i'm going to behave patrick, thank you >> i'm sorry, we've got to go. i forgot about the amazon failure. the phone. >> the phone. coming up, more analyst calls and stocks you need to hear about including one recommendation of a company that actually makes romndioecmeatns and tim sloan. all of that coming up on "power lunch. throughout my career, i've been fortunate enough to travel to many interesting places.
i've always wanted to create those experiences for others. with my advisor's help along the way, it's finally my turn to be the host. when you have the right financial advisor, life can be brilliant. ameriprise people don't invest in stocks and bonds. they don't invest in alternatives or municipal strategies. what people really invest in is what they hope to get out of life. but helping them get there means you can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate many points of view that something wonderful can happen. those people might just get what they want out of life. or they could get even more.
time for "street talk. we kick it off with yelp the company releases an e-24 financials and the operating agreement between yelp and grub hub will enable yelp to have more ebitda per food order there is a probability that it increases its ebitda when it reports third-quarter results. >> lattice semiconductor, the oregon-based semiconductor company is down 9% in the past year, because remember, it had a deal to be bought by canyon
bridge that was blocked by u.s. authorities. jefferies upgraded it from a buy to a hold and said it should be re-engaged with the market now that the deal is gone. it's the fourth tectonic shift in computing and move toward the internet of things with parallel processing and they boost the target from 7 to 650 and about a 25% upside. >> meantime, don't go anywhere breaking news at the top of the hour thfee d's latest read on the economy could be a market mover. stay tuned not rebalancing your portfolio. focused on what you love, not how your money will last through retirement. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan.
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i'm hampton pearson live at the federal reserve. the latest fed beige book says the economic snapshot from around the country, economic activity increased in all 12 fed districts with growth split between modest and moderate. as expected, hurricanes harvey and irma caused major disruptions primarily in the dallas and richmond districts with transportation, energy and agriculture impacted the most. dallas saw a surge in auto sales to replace storm-damaged vehicles as well as labor market shortages and richmond and price pressures due to hurricane-related supply disruptions and richmond also
got a boost from cargo shipments re-routed due to those hurricanes atlanta, tourism, energy and agriculture all hurt by hurricane emma in chicago, manufacturers say the two hurricanes have boosted sales of rvs and construction materials. elsewhere, back to the big picture, manufacturing activity and non-financial services expanded modestly to moderately in most districts. retail spending rose slowly with increases in vehicle sales and tourism in most districts, residential construction continued to increase, however, the low-home inventory is hampering residential sales in many areas jobs and wages, labor markets and widely described as tight, employment growth, modest with some districts reporting flat to moderate increases shortages of skilled workers and construction, transportation and manufacturing and healthcare restraining business growth in some areas minneapolis in particular actually had a decline in employment due to a shortage of
skilled workers. several districts reporting again the scarcity of construction workers and there's the expectation those trends will only be exacerbated as the pace of the hurricane recovery picks up overall, the beige book says when it comes to prices, price pressures remain modest. back to you. >> hampton pearson thank you. let's bring in steve liesman for some reaction. what do you think? >> it's pretty interesting hampton went right where i think the market is focused on the earn had effects and in the districts you would expect them. i've been impressed with the lack of effects of the hurricane. you saw with the housing starts and overall we're still running about a 2.5, 2.6 gdp michelle, you look puzzled. >> diana olick did a report about how the housing market was affected and lack of inventory because there's no workers and here we hear this repeatedly throughout the report, widely reported labor markets are tight, and shortage, and unemployment -- >> right before you get excited about
that that leads to inflation in wages which leads to higher interest rates. >> but what does the beige book say? >> wage gains modest to moderate and price pressures, modest to the moderate >> all of that doesn't that trickle up to her point? in theory, doesn't that add up ultimately to higher wages >> governor mathis and you are associating yourself with the hawkish members of the federal reserve who say it's coming, that inflation is just around the corner to which the doves say still which corner it hasn't happened yet and they're saying we are long past the time where the declining unemployment rate should have created inflation. by the way, it's an interesting reason to read the beige book because that's kind of the way we would get it is through this anecdotal stuff that the fed guys get here and we're just not seeing it. it's not come up and you would expect it and you're absolutely right. it hasn't happened yet. >> i've been looking for years -- oh, we have roger goodell. >> by the way, the word improved used 23 times and 29 times the last beige book. love counting those words,
steve. >> nfl commissioner roger goodell speaking following the league's meeting let us take you there. >> i have set a new standard for the staff, created a new experience for our fans that we think will be extraordinary, and we are confident that dallas will raise that bar even further. so i'm happy to introduce charlotte jones anderson who is going to give her view of what to expect in dallas. again, the ownership was very supportive and we're all very excited to be going to dallas next april for the draft charlotte? >> thank you, richard. >> thank you on behalf of the dallas cowboys, the city of dallas, the city of arlington and the city of frisco, we are so excited -- >> okay. that was roger goodell in an extremely brief segment here so, steve, stick around. are you ready? let's bring in krista guhayez and brian of bimo cappal markets and don chu is on set with us,
as well. brian belski >> brian hey, how are you doing over there? >> doing well. >> to my point before we went to that, improved was used 24 more times and it seems hawkish in a good way, but is that bad for the equity markets because that you remain very bullish on stocks >> thank you i don't think it's bad for the equity markets because what it shows is that the economy's improving, period, and i think what's happening is we in the business have been waiting around for 30 or 35 years for inflation and the wage inflation will be good, but it's not going to happen overnight. you have to remember that we were at crisis levels with respect to interest rates for a while and we've just in the beginning stages moving away from crisis levels and now as we like to say that the traditional method of investing is beginning to occur stocks go up, earnings go up, economy goes up and the dollar goes up and that's the circle of life and investing and we are still very, very early on, so this is not going to be a stock market killer. >> if you put the pieces
together and if you take what governor math son said here in terms of his interpretation of how this will trickle into contributing to inflation and that there's some degree of open-endedness when it comes to interpreting how this will trickle through and when and then the fact that there could be a new fed chair come next year and isn't there a room or isn't there an increase, expectation, maybe, that there could be a misstep by the fed here and it could be a disruption in the steady, slow path that we've had? >> i would say, if you look at history, and i don't mean to be johnny rain cloud, but the fed usually does have a miss step. when does that happen? too late, after things get too heated we're talking about moderate, slow, slow, slow i think too many people are making too much out of the new fed chair as well because at the end of the day it's in the americans' economy, and the u.s. economy's favor to have the lower rates. we haven't seen explosive growth yet and this is the lowest standard deviation gdp growth in the history of recoveries.
it's not like we're rocketing and we're not going to rocket any time soon. >> chris, what did you hear in the minutes and what does that mean for what the expectations are for rates? >> you know, of late i've heard a lot of clients suggest that they think the fed's turning dovish again i just don't buy that. i think the strong labor market and you guys -- >> okay. never mind krishna's camera went out. >> let's go back to roger goodell. >> maybe steve has thoughts on that very point, though. >> i think krishna, whose work i follow pretty closely, the fed is not deterred here, and it's sticking on the slow, gradual increase, and if anything that's dovish it's the long run rate and the idea that they brought down the idea and where they stop was down from what was a 2% number down to 2.75% which is dovish long term if you think of the 3% number and where the fed will end up with the asterisk that no one will be more right than the fed itself and put that aside for a second and the 3% number is the
bottom of other cycles before it, and this is now considered to be the top. >> so, krishna, they tell me you're back. >> i hope so >> all right finish your thought. >> keep you arer hands off the buttons. >> it was a dove, hawk or some bird >> some bird flying by so, yes, tight labor market and the fact that the inflation break evens have been edging up a little bit and the fact that financial conditions are so easy makes me think that the fed is likely to stick to this gradual sequence of rate hikes and not just december and some more hikes next year while we figure out this puzzle on inflation >> krishna, what are you betting on when it comes to the next fed chair? >> i have, in all candor, no insight into the mind of donald trump on this question i guess based on what we read in the newspapers and what we see in the betting off-site, it looks like jpal will still be a nose ahead obviously, increased attention to john taylor, recently and
janet yellin still in with a shot at reappointment and let's not forget kevin walsh. >> way not to take a stand, krishna. thank you. we have to go because we have breaking news. thank you. let's go back to roger goodell the nfl commissioner following the league's meeting and perhaps addressing the anthem controversy >> it's also important for us to honor our flag and to our country and we think our fans expect us to do that, and so that is something that we continue to focus on this morning, but really talking a lot about the opportunity that exists with our players to try and go and really make a difference in our communities in a positive way so i'll let you take questions >> the president this morning tweeted that both you and the league have disrespected the country. is he wrong about that and if so why? >> as i just said, we respect our country. we respect our flag and we respect our national anthem. i think you look at our clubs
and what they do on a daily basis and you look at our players and what they do and how they participate in that we all feel very strongly about our country and our pride and we will continue to do that [ inaudible question ] >> well, listen. i understand -- we're focusing on what we can do and what we should be doing as the nfl i think we have a great opportunity here with our players to really work together and to try to help and make differences in our community things that we all believe are necessary to do, and that's what we will continue to do [ inaudible question ] >> it's not a rule and it's in the policy so why not make it a
rule [ inaudible question ] >> i think one of the things we need to keep the focus on is, again, we believe that our players should stand for the national anthem. that's an important part of our game and our moment, and we believe in that. i think we also have to keep focuses on this. we have about six or seven players that are involved with this protest at this point, and this is something that what we tried to do is deal with the underlying issue and understand what it is that they're protesting and try to address that matter, and so -- let me finish, if you can so the important thing for us is to be able to do that and take that opportunity to make real differences in our community and that is really what's going to ultimately be the important aspect for us long term because this is a long-term issue. we need to make sure that we do that in the right way. >> would you agree that the image itself -- >> i understand how our fans feel about this issue and we feel the same way about the
importance of the flag and the importance of patriotism and i believe our players feel that way. they will state to you and they have stated to everyone publicly and they're not doing this in any way to be disrichful to the fl flag and they interpret it and that's how we deal with the underlying issues. >> thank you, roger. jim trotter here espn >> i don't know where you are. >> right here. in the middle. right here you said you want the players to stand and there's been no change to the game operations manual. my question is what happens if an owner who still feels that he can discipline a player for taking a knee, what response will we see from the league if that were to happen? >> well, jim, we just had two days of conversations with our owners of which this was a fair amount of the conversation, and i think -- i think our clubs all see this the same way. we want our players to stand we're going to continue to encourage them to stand and we will continue to work on these issues in the community. we'll address issues i can't deal with hypotheticals
right now and we'll deal with issues as they come up, but for us, right now, that's our focus. >> roger, over here. >> at this point, what have your sponsors and the networks said to you about this issue and what do you feel the effect is on your business right now of this -- >> mark, we had a report on that, too. listen, we know how important this is to our partners and our licensees and it's important to us, also, so we all share that and we certainly are in great contact with them and we understand the issues. we want to make sure they understand our perspective and what we're doing and in fact, if they can help us, we want them to help us in those issues, but all of this is part of the ongoing effort and understanding one another and making sure that we do the right thing in our communities and the right thing to support our players and do the right thing to make sure we get back to football and in the meantime, people understand how important our country is and how important it is to make sure we're doing things the right way to honor our country
>> roger -- roger -- roger -- byron barnett from boston. what is your reaction to the lawsuit filed for the nfl by the hernandez family and the risks of cte >> listen, this is a matter of litigation so that's something that's going to work its way through the litigation i think there's been a great deal of focus this issue of brain trauma we've been through a great deal of litigation on this issue and settled a major case, on concussions and we'll let the lawyers handle that and deal with it. yes? >> ron mott, nbc news. >> i'm sorry you guys, i can't see you. >> ron mott, nbc news. >> yes >> when you talk about supporting your players, what form or forms will it take because some people reasonably presume that if players felt that this league were truly on their side and supporting them in these causes and these concerns that they would not take a knee so how is this going to manifest itself going forward?
will it put a shield on the line to get into sticky, political and social debates >> okay, but we're not afraid of the tough conversations. that's what we're having with our players. that's what we had yesterday to make sure we understand one another and understand where they're coming from, and i think out of those discussions, they understand that the owners and the nfl really do care about the issues and what we can do to make the communities better. and so, i think that's what dialogue is all about and listening and understanding so that we can get that kind of understanding between different parties, and that's what is complex about this, but that's why it's also really important to do because i think that's where real change really happens and that's the opportunity for us in our communities. [ inaudible question ] >> we've had discussions with them for over a year, and i think we have a very good understanding of the types of things that are interesting and how they get support from the
nfl to do that and we want to do that, and that could be in the legislative matters and that could be in the community with can we participate in ridealongs and try to make sure we understand what's going on in different communities across the nation because the problems in one market is different from the problems in the other market and that involves the clubs and players getting together and making sure we truly understand what's going on in those markets and that's where we see a real impact >> roger mcconnell with the fox business network i do want to ask you a business-related question to the league one of the things we've seen in the polling this week is showed the popularity of pro football started to come down, but they also show there is a big political divide whereas, republicans identifying as pro football fans down 50%, and democrats only 3%. so it doesn't directly speak to the anthem protests, but what's your reaction to those numbers and what, if any, steps can be
taken to reverse that trend? >> well, we believe doing the right thing is what you ultimately have to do, and i think listening to our players, understanding our players and trying to address those underlying issues and making our communities better is where the real opportunity is and that, long-term, is going to benefit us and so that's where our focus is >> what about that split, though between the parties and the political. what we try to do is stay out of politics we're not looking to get into politics what we're looking to do is continue to get people focused on football. so people come >> commissioner, i've been talking about -- ma'am, just a second >> commissioner, as you said, you've been in discussions now for over a year more discussions over the past day and a half or so realistically, can you tell us and tell the american people how closer you are today to
resolving this well, the fact is that we have half a dozen players that are protesting and we hope and we'll continue to work to try to put that at zero that's what we'd like to do, but we want to make sure that we're understanding what the players are talking about and that's complex and we've taken the time, i personally have taken the time to go on those ride alongs and go and figure out what are the things in our communities that our players are expressing and our clubs have a much better understanding from the meetings over the last several weeks to hear directly from those players, and do the tough work to try to understand what is it we need to accomplish together and that's what's -- that's what i think is really the opportunity and what's really happening. yes, judy. i see you. [ inaudible question ] >> i can't hear you, judy. i'm sorry. >> roger, did you come out of the meetings with the owners with an understanding that teams
that have indicated they would discipline their own players for not standing will not discipline them >> no, we didn't discuss that. it wasn't necessary. we had a real focus on making sure that all of our teams understood the kind of dialogue that took place and the kind of things that they were interested in getting support from, and there was complete support for the nfl. each club supporting their players and continuing the dialogue on the club level i can tell you there are unprecedented conversations going on between our players and between our owners, between our club officials and between the league and that is a really positive change for us and we think ultimately will pay dividends. [ inaudible question ] >> you talked about having productive meetings with the players, you personally, do you understand what they're protesting and can you explain your understanding of that >> yes they're very clear about it, and
they're incredibly knowledgeable, articulate and they spent the time to go into the communities and talk about that, and so they really truly understand it. they're talking about criminal justice reform, whether it's bail reform, whether it's talking about sentencing, and mandatory sentencing and they're talking about things that will make our communities better that there's bipartisan support for across our nation and that need focus and they're talking about what we can do to supportthem to effectuate that legislative change and that's, again, very, very positive. they're talking about equality issues, making sure that we're doing everything we possibly can to give people an opportunity whether it's an education or economic and what we can do to try to effectuate that and we believe that we can help them, we can support them and those are our issues national issues and american issues that are all important to deal with >> last question >> roger, two-part question.
number one -- >> two questions >> do you mind >> have you at all communicated with president trump do you have any plans to communicate with president trump? second question is a football question pace of play how happy are you with just the fact that the games are going quicker this year? >> i have not, to your first question to the second question, we are very pleased with the pace of game changes we've seen, in particular, what i call the double up and that bothered me so much on the commercial format, we've seen, i think it's close to a 90-% reduction in that this year which is good for our fans and it's good for the experience for watching an nfl game whether you're in the stadium or on television or on another platform we said all along, this wasn't about reducing the length of games, it was the pace of the game, and so the 42nd clock is an example that we put in after the point after touchdown and the touchdowns have had a real impact
centralizing replay and bringing the surface tablet to the sideline so the official and all of that sped up, what we consider down time time that's not -- we don't believe is attractive to our fans, so we're happy with it and it's only six weeks and we've got a long ways to go, but we're continuing to see what we can do to keep pushing that because we believe that's good for the experience thank you. >> and that was nfl commissioner roger goodell speaking in new york, following the league meetings pretty much 90% of the question, guys, did appear to be about the anthem he responded saying things a little bit -- i don't know, emorphous, doing the right thing is what we need to do was i believe, a direct quote from him, but not as i could hear going into specifics about what they are going to do >> he was asked very specifically a la david stern, the interview we had earlier, why not make a specific rule that would make it a lot easier for and everybody his response
was, you know, we want to hear the players and we want to understand the players and he wouldn't answer the question about the rule the message i took from that is the nfl is going to try to solve inequality, police brutality, et cetera, through ridealongs when i worked in local news, ridealongs you rode along with the cops in neighborhoods to see what's happening. >> he said he believes or the nfl believes that all players should stand and it stopped short of any rule and there is that am big uity and i would imagine to continue to see players kneel in protest and things to come >> whether he will stand behind teams that choose to discipline players who do protest, and he was ambiguous about that, i thought, right he said we'll cross that bridge and i don't want to get ahead of the ownership. >> i don't want to answer that question nothing concrete came out. >> nothing concrete came out of
that other that the dialogue continues between the league, the ownership and the players and this issue seems to be sort of riding along a slow way >> and you missed the big headline he's happy with the increased pace of play time. >> likes the quicker games >> coming up, an exclusive interview of wells fargo ceo tim sloan as the bank ietotrs recover from the bank account scandal. most etfs only track a benchmark. flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.
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let's get a check on the markets. green across the board in fact, the dow, s&p and nasdaq all hitting record highs today the dow is higher right now by 161 points and a lot of that is ibm seeing its biggest gain in almost nine years. s&p 500 is also higher right now by just about four points. best performing sector there the financials with goldman sachs and morgan stanley adding a couple of percent a piece. the russell, meantime is higher by 0.7%. will frost is joining us with tim sloan. >> thanks very much and tim, thanks for joining us. >> great view. >> great, my first experience in san francisco, and of course, wells fargo's home state and hometown, and it's been a year
in the job so congratulations for that >> thank you >> i wanted to start with the q-3 numbers. >> sure. >> which clearly disappoint and shares fell on the back of it. >> in particular, disappointing loan growth relative to peers. talk us through that, how much of it is by design and how much of it is coming from factors out of your control. >> when you talk about the consumer loans and the consumer side we saw good growth in our mortgage business and also in our credit card business and credit cards were up 5% year over year. the two consumer loan categories that were down were one, home equity which has been running off since the crisis it used to be the portfolio everyone was concerneded about and now they want to know why it's running off my expectations is we'll continue to grow -- we will do more home equity loans this year than we do last year and on the auto side a year ago we made a strategic decision and we looked at the auto market and we pulled back just a bit and overall consumer loans grew from the second quarter to the third
quarter. >> i guess one area that lots of investors are fascinated by, is to what extent the slow loan growth is driven by consequences of the sales practice scandal which you mentioned and talk us through how that scandal has impacted some of the softer loan growth numberses >> sure, it really hasn't had much impact on the commercial side of the business medium size and larger corporate customers have been a small impact on our government and institutional banking business in the wealth and investment management business we've continued to see loan growth again and no major impact there. on the consumer side the primary impact has been referral activity from our branches and that's been in the low single digits in terms of the impact, but we're seeing that improve over the last couple of quarters, right? it's not back to where it was a year ago because of all of the changes that we've been making in our retail bank. >> that's a key question for investors. legal costs aside, settlements
aside which is sort of one offs. the fundamental business, will it ever recover back to the growth rates you saw of the past and with the share price and the earnings multiple, and permanently you stuck on this slightly lower level now >> i hope not. wil willfred, we're in the midst of transforming wells fargo and the retail banks how folks are being compensated and we're turning over every rock and making changes and not only to fix everything that was broken and also in terms of investing and making a lot of changes in terms of new products and services i'm very optimistic and confident that over time we'll achieve growth rates that we've seen historically. >> away from those earnings, a couple of other in the news questions, bitcoin lots of comments from your peers. are you in the camp that it's a fraud or an opportunity? >> those are two ends of a big spectrum
>> i think in terms of the underlying technology, it's very interesting. distribute ledger technology is very interesting in terms of how it can be applied to all sorts of products and services within financial services we've got investments and we've got partnerships and the consortiums looking at that all of the time. in terms of it as a crypto currency, i would probably rather own a dollar than a dollar bit coin. >> it would cost you more, as well >> 5,500 at the moment and let's quickly touch on the fed president trump's meeting with janet yellin tomorrow to talk about her future do you think her tenure has been good enough to warrant an extension of her term? >> i think chair yellin has continue done a terrific job in terms of guiding the fed through a difficult transition which is a period of very low rates and a large balance sheet that's starting to bring the balance sheet down and start to increase interest rates because we've seen a growing economy so i think she's done a good job. in terms of who is the next fed
chair, i'll let somebody else make that decision >> fair enough taking the fifth amendment on that one. let's move on to the sales scandal and i'll focus more on a moment on the changes you've made since being ceo, but first, let's pause on the senate hearing a couple of weeks ago which is what we discussed this evening and it did focus much more on what you did and didn't know and what you did and didn't do in the period before the scandal became public. here is one particularly strong phrase from senator warren she said, at best you were incompetent. at worst you were compliant. you should be fired. some strong words. >> yeah. >> political theater aside, does that sort of attention and rhetoric make it impossible for you to do your job >> no, not at all. i've got a responsibility to 268,000 team members and over 72 million customers and that's who i focus on every day, and i think i'm the right person to be the ceo because of my experience, because of my ability to make change which we'll talk about, i'm sure, in a
minute and because of the optimism and resiliency that i have and because i have the support of our team and everyone has a right to an opinion, but i'm going to focus on customers and team members >> in terms of just quickly focusing on perhaps how she formed an aspect of that opinion in terms of what you did and didn't know, 13 earnings calls when you were cfo, april 2011 to april 2014 you mentioned the word cross-sell 53 times did it ever cross your mind in those 53 occasions to give more information that you were aware of to enlighten the investors listening to the full scale of what cross-sell meant at wells fargo at that time >> we disclosed our cross-sell ratios in the normal course. it was a non-gap type of a measure. cross-sell is shorthand for relationship management. clearly, was there an issue that we had in the incentive plan and the focus selling products as opposed to providing the right
service and advice to our customers. that wasn't elevated to the senior leadership including me until late in 2013 >> well, that's true, and very clearly, and late in 2013. the board review says you were aware before then and you weren't fully aware of the magnitude until 2013 november 8th, th, 2013 the chief executive officer in an e-mail notes we're trying to limit the damage of further terminations in the short term hoping the l.a. times story doesn't become national and very clearly, you're up to speed on how big an issue there is then, and the following analyst call you mentioned cross-sell five times and selective release of information there to investors i'll go one step further if i may, tim, because even three months before this became public you were ceo and president at that point you've been involved in firing carrie tollstead and fully aware
of everything. you were asked in an interview june 16, 2016, public interview, whether the cross-selling strategy had been pushed too hard and you said no i mean, what do you say to the. >> that bought and reassured after three years of negative press, relative interview from tim sloan, someone they trust and were reassured about it for three months later to see that it was, in fact, a lie at that point and the share price underperformance was endured since. >> let me push back then, and i don't. i didn't lie to shareholders and our stakeholders what i described was the fact that cross-selling which is shorthand for good relationship management, there's nothing wrong with good relationship management what we clearly had and what we've talked a lot about, and you and i have talked a fair amount about it is the fact that we had an incentive plan to drove inappropriate behavior since i've become ceo, we've dealt with that. >> sure. we'll come to that
this was the question you were asked, on the topic of selling, wells has come under scrutiny for the strong sales culture, and is there any point that the bank has pushed that to the limit? no was your response is that not leading investors three months before it came out? >> i don't think it's misleading investors. is there any sense the bank has pushed the strategy to the limit? your answer is no. >> okay. we're talking about the bank we had an issue within the retail banking business and we dealt with that since i've become ceo >> okay. >> i beg to differ, i feel investors watching now who have bought the stock then and endured significant, and will be feeling hard done by based on that. >> willfred, we agree on a lot of things and we will disagree on that. >> for sure we will disagree on that and being ceo of one of the biggest financial institutions of the country with that comes responsibility and it seems a privileged position, it feels like not much has been taken
there, but let's put that aside and that was the past before you became ceo and let's talk about what you've done since, and are you happy that the changes you've enacted will guarantee that this kind of thing will not happen again >> there are no guarantees in life and i can't promise anybody perfection, but what i can promise you and all of our stakeholders that we are absolutely transforming this company and we're fulfilling the obligations and promises that we've set for ourselves. we've remade our retail banking business we've reorganized the company in terms of centralizing the risk and control function and we're building a better wells fargo and remediating all of our customers that had any issues for us. >> were you slow when you became ceo to get a handle on this? >> you had to increase the numbers of fake accounts from 2.5 to -- sorry, 3.1 to 2.5 million accounts and five
months after you'd taken the helm when you had time to get a handle on things you'd said that the worst was behind you so when you say now that 3.5 is the maximum, can investors be sure of that can they believe you the reason that it's taken so long is because we wanted to make sure that we did a very thorough and com pprehensive lo and we would look back at nearly eight years of accounts that were open and 165 million accounts because we wanted to ensure all of our stakeholders including our customers that we were doing the right thing with them we contacted 43.5 million of them in the fourth quarter and if you've had any issues come and see us and i do think the worst is behind us >> in terms of the insurance issue that speaked up on the side and mortgages, any further costs that come of that and any further issues that haven't been disclosed yet? >> we will continue to look all across the company i can't promise you that we won't find something, but what i can promise you is that we're fulfilling our obligations and
promises that we made. we're turning over every rock and we're improving and building a better wells fargo and we're being transparent about everything that we find. >> in terms of all of the things we discussed obviously so far, you were obviously a senior executive of the company throughout the period and you've admitted plenty of times that you could have done more and wished you'd done more >> absolutely. at the same pay rate thousands of junior employees lost their jobs and some of them, many of them wrongly i wonder whether your presence here at the top of the day is inviting ongoing negative, political attention and media attention and earnings impact we touched on before and with it, you know, significant share price underperformance, not just since you took over and when it's very much under your watch. did you take personal responsibility and underperformance, and is it the fault of john stump in the past? >> well, willfred, i'm the ceo
of this company and i take responsibility for the action of this company i don't think i'm a liability for the company at the moment i think that i will step aside i'm not stepping aside because i'm an asset to the company. we're moving the company forward. the transformation that's occurred in the company since i've become ceo has been unprecedented. we're not perfect, but we are making progress. you see that each and every day. you talk about the team members and one of the things we talked about on the earnings call is the turnover now is at its lowest level in six and a half years. 268,000 people every day are saying i like wells fargo, right? i want to be here. i want to serve our customers. i'm really proud of that. >> tim, congratulations again on the first year i'm sure it's not been ideal first year and we appreciate the time today to mark the first time to talk. >> it's a privilege to be ceo of the company. >> thanks for joining us and
back to you at headquarters. >> that was wells fargo tim sloan. let's bring in "fast money's," guy adami. >> it is a privilege to be the ceo of wells fargo, the way he ended it is exactly right and with that privilege is not necessarily with mr. sloan he's tried his best and over the last couple of months he's done a great job and my problem is the speed with which they didn't address it when this started over a year ago, it seems. >> would they be better off with an outsider and with a different person leading that company right now? >> i, optically, tyler, i believe he should be. >> should he be fired? >> i don't think he did anything that was fireable, but when you sit in positions like that the buck does stop with certain people. >> he wasn't ceo and president at the time of "the l.a. times" story a few years back, but it seems that that ship has sailed in terms of turning to new
blood. >> this was not pervasive within wells fargo, and it was big enough where obviously, we're talking about it now, but it wasn't widespread, and i'm not with wells fargo >> there should be a discount to the stock because of the scandal. >> i believe so. if you look the stock has underperformed citibank and j.p. morgan wells will get through this. the banking sector looks attractive and let's get onboard. >> so you can see that he was in a coo role he should have known may well have known, if he didn't know, he should have. you say that the company would probably be better off with an outsider, but you say he shouldn't be fired >> you're threading a needle and i think wells fargo did the exact same thing they thread the exact same needle that i guess i'm attempting to thread right now i think he understands the bank.
and the problem. >> when willfred kept asking him how should shareholders feel when you're asked about whether or not this is going to be a problem and you say no and then the stock price gets hammered? i know that's water under the bridge, but if you were holding the shares that day would you have been satisfied with the answer he gave today >> probably not. >> no. >> listen, again, you want to bring -- it's very hard. continuity's a very important thing and sometimes continuity is a bad thing, but he was there for a long time and understood how that bank worked and i don't think he was part of the problem. i think right now he's more part of the solution. >> it's banking. it's not rocket science. >> i'm sorry, tyler. >> why are you coming after me >> we'll have you back we'll have you back. all right. we'll be right back. "volatile markets." something we all think about as we head into retirement. it's why brighthouse financial
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it's a mini fast. >> in the spirit of fast, we'll play a game that we love to play on fast. would you rather rather? ge, nike or disney of the dow laggards tim, start with you. >> i think nike, and again, nike's weakness to me,disney, sh you. >> i think nike. and again nike's weakness to me, the guidance to the market fx has been probably 25% of their short fall and the revenue guidance from 2015 investor day. obviously tremendous competition in north america, obviously directed consumers a big secular issue. again, they can cyclical, unlike the other companies, disney's got major cyclical issues. nike, good for them, it's the most misunderstood stock going into earnings and analysts are out of earnings going into investor day, there are catalysts ahead and the perception in the community, the bar is too low >> i like this game, would you
rather rather. pardon me, there's a couple different choices. >> i'm surprised >> i would take general electric at this point. i have not been a ge fan for quite some time, we talked about honeywell's performance over the last decade or so. but i think nike's facing some serious competition, specifically in the form of adidas, which david seaberg has done an amazing job. disney, they're still secular head winds going on which really hurts disney i think the multiple for disney is the rich here i agree it deserves the premium valuation, but not nearly twice it's rival what does it leave me with general electric why? it starts to make sense, great cash flow. maybe they're figuring out what businesses they're in and what businesses they shouldn't be in and some of the parts makes ge very interesting here. i think nike again faces serious challenges i think disney is headed to 91, i think ge might have found a floor here of $23.
surprisingly enough from my end -- >> criticize, comment? >> of course i do. of course i do again, a lot of bad news in the ge crunch, but we're going to talk about this tonight where a lot of these companies in the dow were starting to earn their way out of the doll grems of stock price. they're going to earn 15 cents in three or four years ge is going to do nothing. it's difficult for me to buy a stock that i think is trading at a valuation, and i think ge, despite the summit of parts value, it's a conglomerate, they traded at discount for a reason. nike directed consumers the way back, and i think they'll do it. >> let's simplify this game. >> appreciate that straightforward would you rather at this point. you chose ge, signs of life for ibm in almost nine years so would you rather ge or ibm for the next year? >> general electric. >> phil. >> general lek ring. >> signs of life here.
>> no question about it, i will say this, this is one quarter, this is 22 straight quarters of revenue growth going the wrong way, people are making a quantum leap that ibm has made the transition they made maybe it this quarter, i'm not satisfied though, one quarter is not a trend make, folks, just pointing that out. would you rather rather come back here in a year and i say ge. >> would you rather -- >> there's only two. >> it's fine, it's fine. we'll let that go. tim, quickly, on yours, nike or ibm for one year >> look, the movement in imb today is your classic move you get the biggest move when things go from bad to not good i think that's what we got in the numbers that came out. absolutely nike again, world class company, world class management they're doing fine the adidas trade is yesterday's trade, relative value. >> thank you for playing along, i will see you both tonight at 5:00 on fast, meantime, do not miss jim kramer's interview, the martin schroeder, tonight at
6:00 eastern time. brian. >> thank you very much rising labor costs could be the next problem for chipotle. downgraded the stock today let's focus on trading nation. gina sanchez, geno, what do you make of this downgrade pilingen to chipotle? >> well, this is one downgrade if you look at total analysts, there's only about 11% of analysts that have a sell rating in fact most are in a hold mode which is about 66% of analysts are holding chipotle light now if you look at it's comps at evaluation basis, it is the most expensive stock relative to other similar companies like jack in the box, et cetera and they've obviously had some issues e. coli issues, rat issues, a number of issues this labor issue is a real issue. i would be looking at it this is a concern. >> yeah, i mean, matt, listen, the stocks trading at 3.20 and
change, it is 367. $47 above where the stock is now. they've got to come out and have more downgrades, cut their target prices or chipotle's got to come back, what do you think is going to happen >> well, it's really hard to say because like gina says, the fundamental situation is very challenging to say the least, believe it or not, on a technical basis, the stock is starting to look okay. it's obviously been going down for many, many months, but it's starting to try to perform a base down at 3900 level it touches that level back in august, again in september, and again earlier this month in october. and it's held it each time it's now broken above it's 50 day moving average that's positive. and the most recent news today has not been enough to take it back down below that 50 day moving average we're kind of a key juncture right now. if the stock continues to roll over and breaks below 300, that's a big, big problem. however, if it can rally from here and break above it's highs from last weekend at the 332 level, it's going to show that at least on a technical basis,
say that the nfl was going to work on criminal justice reform, bail reform, inequality and do what we can to help the players with those legislative changes. it sounds the core competency of the nfl even if that is what his heartfelt desire is. >> sounds like he's playing out the clock in these demonstrations that's how i took it maybe a punt good luck with solving this, i'd love to. >> i think concussions will be a bigger deal. >> i agree with you on that. let's -- two developments just in the last hour, one on health
care, the white house saying that the bill, the bipartisan bill is a good step in the right direction, but that the president does not support it in it's current form. and needs some further improvement before he will go along. meantime, the senate gop whip says he thinks that the gop does have the votes to pass a budget resolution, which is the pass to tax reform >> thanks for watching power lunch. is this my job >> what are you doing? >> oh, this is the other big story -- mike knows. mike -- >> is that a character >> according to some it may as well be. >> i didn't know the band wagon went up your way >> when he hit the 50th and they had to bring him out of the dugout and man, it's been fun to watch this series, but i'm sorry, where were we? >> we're i